Just when you though Prime Minister Malcolm Turnbull’s negative gearing scare mongering could not get worse, we get this via the Herald-Sun:

“Labor’s policy on negative gearing, let’s be quite clear, what that will do is in practical terms, remove about one third of the demand for established residential properties,’’

he [Turnbull] said.

“It will reduce the number of properties that are available for rent, it will reduce the value of properties and it will inevitably lead to an increase in rents.’’

Are we seriously expected to believe that channeling negative gearing into newly constructed dwellings would magically “lead to an increase in rents”?

Sure, there would be less “investment” (read transfer of ownership) in existing dwellings, but those homes would not magically disappear from the supply-demand equation. Rather, those homes would be purchased by an owner-occupier, thus reducing demand for rental properties by the same proportion as the fall in rental supply.

Moreover, by channeling negative gearing towards new builds, dwelling construction will increase, as will the supply of rental accommodation. And this extra supply would obviously lower rents. It’s not rocket science.

Yep, this thing has been allowed to run way too far and is now beginning to turn us from egalitarianism to a society of haves and have-nots - a landlord class and a renter class, defined largely by age group. Two full-time average wages are no longer enough to buy a family home in the places where about half of Australia's population lives. This isn't an opinion or forecast - it's happening NOW.

Legislation has become ridiculously skewed to favour investors over people just wanting somewhere to live. It effectively locks coming generations out of home ownership, while providing a huge tax shelter primarily for the better-off, and guess who gets to pay the cost of that tax shelter? The very same people who can't now afford a home! Could there be a more sickening example of legislation favouring the better off - encourage and reward those who already have more to get even more again by owning more houses than they can live in, deprive those who already have less of affordable housing and make those who have less pay for the financial aspirations of those who have more through the tax system. And after all that, almost all of the money spent on NG housing just goes into swapping existing housing back and forth at spiralling prices and does almost nothing at all for the housing supply.

Offhand, it's pretty hard to think of a more striking example of a TOTAL POLICY FAILURE

To bring my favorite bugbear into this discussion: it could even be that preserving this tax dodge was the reason the Libs killed the NBN.

It is true that even today people can afford a house—in rural locations. People don’t buy/build houses there because there is no work there. Come the real NBN, you can work in Outer Woop Woop and the NBN brings you your work there. Now who is going to rent those NG houses? Not just that, a conservative considering the huge upheavals (“disruptions”) the NBN made possible would have a heart attack! Easier to kill the NBN even tho it will kill our future prosperity with it.

That SKA project is building a network with the rest of the parts of the SKA capable of 8tbps (terabits!) and it is costing only millions. THAT is a network, oh boy!

Abbott & Co are going to cause the mother and father of all recessions—be prepared!

Shorten articulates Labor's stance at the National Press Club (copied in enitity, linking not possible)

On superannuation, negative gearing and capital gains, Labor has been prepared to give honest answers to the hard questions:

•Are these subsidies working as intended?•Are they helping the right people?•And can Australian taxpayers afford them?

Our fully-funded plan to tighten unsustainably generous superannuation loopholes, which disproportionately benefit very high income earners already comfortable in retirement, will return $14 billion to the Budget bottom line – and it has been public since last April.

NEGATIVE GEARING

This year, we took on a structural flaw in our tax system that governments and oppositions have been too scared to confront for thirty years.

Labor’s plan for housing affordability will reduce the upward pressure on housing prices, and this is a good thing.

We have become a society that cannot house its own children.

But we cannot be a society that refuses to help our children.

That’s why we have we have to break the dismal cycle – and break it now.

Nothing will help first-home buyers more than levelling the playing field against property investors and speculators who currently have their interest costs subsidised by the taxpayer.

Our measures will:

– lift investment in new housing

– help increase supply

– and help boost jobs in construction.

Over the last five years, every State and Territory Government – Liberal and Labor – have abolished First Homeowner Grants for buyers of established dwellings and redirected them for buyers of new dwellings.

Likewise, Australia’s foreign investment regime encourages buyers into new housing for the same reason – to boost supply and create jobs.

All of this is designed to reduce upward pressure on prices of established dwellings and increase supply.

And none of this has had the dire consequences foreshadowed by the Liberals’ fact-free scare campaign.

Where was Mr Morrison and Mr Turnbull when his own party was redirecting resources from established dwellings into new housing?

Where were their warnings about a stock market collapse and the collapse of the value of all houses?

They were silent, because they knew then, as they actually know now, that Labor’s campaign will not have the consequences that Mr Turnbull says, it’s actually good for the economy.

Our plan will also deliver Budget repair that is fair, returning $32.1 billion to the bottom line over the next ten years – and $7.3 billion a year by the end of this decade.

Our reforms are prospective, not retrospective.

No-one who has invested under the current arrangements will lose any deductibility, no-one will be left high and dry.

But currently, 93 cents in every dollar of investment goes to the purchase of existing housing stock.

This doesn’t create jobs, boost supply or help with housing affordability.

Play0:00/0:00FullscreenMuteLabor's tax reform will 'boost' new housing supplyThe federal opposition has defended proposed changes to its negative gearing rules, saying they will put first homebuyers on a more level playing field. (Video Courtesy ABC News 24)The sins of negative gearingSydney's housing affordability crisis is being artificially inflated by up to 90,000 properties standing empty in some of the city's most desirable suburbs, experts say.

Vacant properties were among the "perverse outcomes" of tax incentives that encouraged some investors to favour capital growth over rental returns, according to the analysis by the UNSW's City Futures Research Centre.

The mismatch between housing supply and need could be artificially inflating Sydney's housing shortage, experts say.The mismatch between housing supply and need could be artificially inflating Sydney's housing shortage, experts say. Photo: Supplied"Leaving housing empty is both profitable and subsidised by government," researchers Bill Randolph and Laurence Troy said. "This is taxation lunacy and a national scandal."

According to 2011 census, in Sydney's "emptiest" neighbourhood of the CBD, Haymarket and The Rocks, one in seven dwellings was vacant.

Close behind were Manly-Fairlight, Potts Point-Woolloomooloo, Darlinghurst and Neutral Bay - Kirribilli, which all had vacancy levels above 13 per cent. These neighbourhoods, together with central Sydney, account for nearly 7200 empty homes.

The analysis of the 90,000 unoccupied dwellings across metropolitan Sydney compared the number of empty homes in a suburb against the rate of return investors made by renting out a property.

It found that properties in neighbourhoods with lower rental yields and higher expected capital gains were more likely to be unoccupied.[My emphasis]

Gordon-Killara on the north shore had the highest share of vacant apartments, with more than one in six unoccupied on Census night.

By contrast, only one in 42 dwellings (2.4 per cent) in Green Valley-Cecil Hills, in Sydney's west, was unoccupied.

The results suggested property investors in some of Sydney's most sought-after areas were focusing on growing the value of their properties, with losses offset by tax incentives such as negative gearing.

This could leave investors indifferent to whether the dwellings were occupied, Dr Troy and Professor Randolph said.

Labor’s decision to remove NG & increase the CGT is the right policy.

Malcolm tried to make a big deal of allowing NG costs to be written off against other investment income but net income from investment is what should get declared and taxed, the evil of NG is allowing wage income to be reduced then capital gains taxed very lightly.

Empty houses will become a much less preferred option when CGT is increased and NG can’t be used to decrease wage income. Allowing NG on new properties should increase the amount of housing stock.

Abbott & Co are going to cause the mother and father of all recessions—be prepared!